Fee-weary air travelers get a break -- for now

AP File PhotoPassengers wait to check in at Logan International Airport in Boston. Five major airlines have agreed not to follow Spirit Airlines in instituting fees for carry-on luggage, and New York Sen. Charles Schumer said he was hopeful other carriers would follow suit. Schumer said Sunday, April 18, 2010 that he had received commitments from American, Delta, JetBlue, United and US Air.

U.S. airlines never met a
fee they didn't like. Until now, it seems.

Five major carriers on
Sunday agreed not to follow the lead of a small Florida airline that
plans to charge for carryon bags. Their commitment comes just in time to
keep travelers from running for the exits during the peak summer flying
season, but it is doubtful that it marks a change in strategy.

Airlines
are going to tack on every fee they feel they can get away with because
it bolsters their revenue stream while allowing them to keep base fares
lower. They just don't feel like passengers will tolerate losing their
sacred free carryons — at least not right now.

The promise to New
York Sen. Charles Schumer from American Airlines, Delta Air Lines,
United Airlines, US Airways and JetBlue Airways comes despite the fact
that some of those same airlines are expected to report first-quarter
losses next week. They were stung by higher fuel prices and the heavy
February snowstorms.

Ancillary fees for air travel — including
baggage fees, reservation change fees and other miscellaneous operating
revenue — have been piling up.

For U.S. carriers they totaled
$1.95 billion in the third quarter of 2009, roughly 36 percent higher
than for the same period a year earlier. For 26 large U.S. airlines,
those fees made up 6.9 percent of their total operating revenue in the
third quarter of last year, according to the most recent government data
available.

But major carriers risk alienating customers if they
follow Spirit Airlines' lead and impose a fee on carryon bags. In
August, Spirit will begin charging customers up to $45 to place a bag in
an overhead bin.

Other fees haven't stopped people from flying,
but many can be avoided. Carryon bag fees would be hard to avoid.

"We
believe it is something that's important to our customers and they
value, and we will continue making that available to them at no charge,"
American Airlines spokesman Roger Frizzell said.

It wasn't clear
how long the five airlines had pledged not to charge for carryons.
Frizzell couldn't say, and a spokesman for Delta declined to comment.

Schumer
and five other Democratic senators — New Hampshire's Jeanne Shaheen,
Maryland's Ben Cardin, Minnesota's Amy Klobuchar, and New Jersey's
Robert Menendez and Frank Lautenberg — support legislation that would
tax airlines if they charge carryon bag fees.

Schumer said the
legislation will move forward until it becomes clear that no airline
will institute the charges. He will have an uphill battle changing the
minds of Spirit executives when he meets with them soon.

Spirit
CEO Ben Baldanza told The Associated Press on Sunday that his airline is
moving ahead with its carryon bag fee.

"Our plan was never
predicated on anyone matching us," Baldanza said. "The fact that other
people are saying they won't has never changed our view that this is
right."

He said his competitors' decision actually puts pressure
on those airlines because Spirit has lowered its fares more than the
price of the new fee.

"We knew we took a risk with this strategy,
but we believe on balance it's one that our customers will buy into,"
Baldanza said.

Analysts expect several major carriers to get back
in the black in the current quarter — the second quarter — and in the
second half of the year, thanks to the summer and holiday travel rushes.
They wouldn't want anything like an uproar over carryon bag fees to
keep passengers from flying.

Even so, for the financial
improvement airlines have seen to be sustainable, revenue needs to keep
rising — either through higher fares, more fees or both — and airlines
need to better position themselves in case fuel prices spike even
higher.

On the last day of the first quarter — March 31 — the
price of a barrel of oil closed at $83.76, more than 68 percent higher
than on the same day a year earlier.

That means if major carriers
don't charge for carryons, they could increase existing fees or
institute new fees altogether.

Any way you cut it, that adds up to
less money in the pockets of U.S. air travelers.

"As a practical
matter, as industry conditions change and if profitability is further
challenged, we're likely to see some sort of price increase," aviation
consultant Mark Kiefer said.